Despite a dip in rig counts last week, US domestic energy pipe demand is strong and spot prices continue to remain stable.
Although domestic distributors tell SteelOrbis that July was a relatively slow buying month due to concerns that steep price declines in the lethargic domestic flats market may begin to spill over into the market for domestic electric resistance welded (ERW) energy pipe, overall demand levels remain consistent enough to prevent any immediate decline in US domestic energy pipe spot prices. While those worries have not entirely dissipated, domestic pipe prices have stayed stable in the last week. J55 ERW oil country tubular goods (OCTG) casing spot prices are still $66.00-$67.00 cwt. ($1,455-$1,477/mt or $1,320-$1,340/nt) ex-Midwest mill. API X42 ERW line pipe spot prices are in the range of $65.50-$66.50 cwt. ($1,444-$1,466/mt or $1,310-$1,330/nt) ex-Midwest mill.
According to consulting firm Baker Hughes, the US rotary rig count decreased by eight last week to 1,908, but prior to last week's drop, rig counts have been consecutively increasing week-over-week since the final week of May, so sources tell SteelOrbis that the latest drop is most likely a minor blip, rather than an emerging trend. In the previous week, US rig counts increased 11 and were up another 18 the week before.
Import activity isn't particularly robust, either, and trader sources have indicated that a drop in some import prices for both line pipe and OCTG casing last week didn't do much to bump up demand levels. But as delivery dates begin to move toward early 2012 (currently in mid-to late-November), import activity is likely to pick up, which would likely have a positive effect on prices as well. But for now, Korean and Taiwanese API X42 ERW line pipe spot prices are still $48.50-$49.50 cwt. ($1,069-$1,091/mt or $970-$990/nt) DDP loaded truck in US Gulf ports, and J55 ERW OCTG casing spot prices remain in the range of $52.50-$53.50 cwt. ($1,157-$1,179/mt or $1,050-$1,070/nt) DDP loaded truck in US Gulf ports.